Elixir Gaming Technologies Reports Fourth Quarter and Fiscal 2008 Results and Provides Market Update

- New Installed Base at Premier Club at NagaWorld Posting Strong Initial Net Win Per Day -

Conference Call: Today, March 19 at 8:30 a.m. ET
Dial-in numbers: 212/676-4919 or 415/247-8585
Webcast: www.elixirgaming.com
Replay information provided below

Las Vegas, Nevada – March 19, 2009 - Elixir Gaming Technologies, Inc. (AMEX:EGT) (“Elixir Gaming” or “the Company”), a leading technology and solutions provider to the Pan-Asian gaming industry, today reported operating results for the fourth quarter and fiscal year ended December 31, 2008 and reviewed recent corporate progress.

Recent Highlights:

A total of 6 venues and 1,029 installed units currently in operation, comprised of 5 venues in the Philippines with a total of 829 installed units and 1 venue in Cambodia with a total of 200 installed units, reflecting the impact of recent regulatory changes in this market.
Total net revenue from machines on participation declined 7% from the third quarter of 2008 to $1.0 million in the fourth quarter of 2008, reflecting the impact of regulatory changes in Cambodia partially offset by continued revenue improvements in the Philippines.
Average net win per day per machine for the fourth quarter was $47, flat with third quarter 2008 levels.
$14.5 million in cash as of December 31, 2008.
Executed slot participation contract with leading Cambodia resort casino, NagaWorld, in the first quarter of 2009 and recently expanded from 146 to 200 gaming machines in operation with average daily net win per machine escalating from $54 in February to $171 in the first half of March.
Continued to effect reductions in operating costs, which are expected to lower quarterly cash SG&A expense to $3.0 million by the second quarter of 2009 and to $2.5 million by the third quarter of 2009, representing respective reductions of 21% and 34% from third quarter 2008 levels.
In February, sold assets of our legacy shuffler business to Shuffle Master, Inc. and settled long-standing litigation, which immediately benefits the Company’s balance sheet and liquidity.

Clarence Chung, Chairman and Chief Executive Officer of Elixir Gaming, commented, “During the past six months, Elixir Gaming has taken significant steps to enhance our financial flexibility while solidifying our base of electronic gaming machines on participation to support ongoing and sustainable growth. In November, we entered into agreements with Elixir International that significantly improved our balance sheet and liquidity, reduced our operating costs, eliminated potential dilution for our shareholders and improved our ability to source games and identify new venue opportunities. In addition, we recently entered into an agreement with Shuffle Master to sell assets of our table game business and settle all outstanding litigation. These agreements provide Elixir Gaming with additional liquidity to fund our operations and pursue new growth initiatives while freeing up additional resources to focus on driving win per day and expanding our installed base of gaming machines.

“Reflecting our enhanced capital and operating structure, Elixir Gaming has the resources in place to grow at a measured pace despite the current challenging regulatory environment in Cambodia. In January, we quickly executed upon our initiative to install 146 electronic gaming machines as part of the new Premier Club at NagaWorld, Cambodia’s premier luxury destination gaming resort. NagaWorld is one of a few licensed facilities currently operating in Cambodia following the recent enforcement of more stringent regulatory guidelines, and benefits from an exclusive 70-year casino license issued directly by the Cambodian Cabinet. The customer response to the Premier Club is encouraging as net win per day per machine averaged $54 during the month of February on an average machine count of 146 and ramped up to $171 for the first 15 days in March on an average machine count of 182. Reflecting this demand, we recently expanded the number of machines on the floor at the Premier Club and currently have 200 machines in operation at this facility. The operations at the Premier Club represent a successful first step in Elixir Gaming’s previously stated initiative to participate as an operator in this market. Going forward, NagaWorld is poised to benefit from the current closure of almost all of the competing slot clubs in the Phnom Penh area and we will continue to work on marketing initiatives to further ramp up win per day at this facility by delivering superior customer service and an entertaining gaming experience for our customers.

“While the challenging regulatory environment has benefited the initial performance of Premier Club at NagaWorld, it has negatively impacted our operations in other facilities throughout this market. In December, the Prime Minister issued a directive requiring operators to obtain additional licenses to operate electronic gaming machines. As a result, three of our facilities in this market closed in December to pursue compliance with these requirements. Following further action from the Prime Minister in February, all but two of the approximately 70 slot clubs in the Phnom Penh area were temporarily or permanently closed, including all of the facilities in which Elixir Gaming operated electronic gaming machines except for NagaWorld. We will not seek to reopen our closed facilities in Cambodia and instead will focus all of our resources in this market on optimizing the potential of the Premier Club at NagaWorld.”

Cambodia Market Update

Cambodia’s Prime Minister issued a directive in December 2008 requiring slot machine operators to obtain additional licenses and operate only in certified hotels. Three of our six operating clubs in Cambodia temporarily closed in December to pursue compliance with the directive. In late February 2009, the Prime Minister called for the closure of the country’s sole bookmaker, subsequent to which all but two of the approximately 70 slot clubs in the Phnom Penh area temporarily or permanently closed. Elixir Gaming currently has 200 machines in operation in Cambodia at NagaWorld, which operates pursuant to an exclusive casino gaming license issued directly from the Cambodian Cabinet, compared to 496 machines in operation in Cambodia as of September 30, 2008. Going forward, Elixir Gaming plans to focus its resources in the Cambodia market on its operations at NagaWorld, which is expected to benefit from the widespread closures of slot clubs in the Phnom Penh area.

About Elixir Gaming Technologies, Inc.

Elixir Gaming Technologies, Inc. (AMEX:EGT) is a provider of gaming technology solutions. The Company secures long-term contracts to provide comprehensive turn-key solutions to 3, 4, and 5 star hotels and other well-located venues throughout Asia that seek to offer casino gaming products. The Company retains ownership of the gaming machines and systems and receives recurring daily fees that average in excess of 20% of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with a focus on the Philippines, Cambodia, and Vietnam markets. For more information please visit www.elixirgaming.com.

2009 Operating Expectations

Open three to four new venues during 2009, two of which are expected to open during the second quarter in prime locations in the Philippines.
Cost savings initiatives, including the closing of the Company’s Macau and U.S. offices and China manufacturing plant, further downsizing of the Hong Kong and Cambodia offices, voluntary senior executive salary reductions, and additional headcount reductions expected to result in quarterly selling, general, and administrative (SG&A) cash expenses of $3.0 million by the second quarter of 2009 and $2.5 million by the third quarter of 2009.
Total capital expenditures of approximately $3 million in fiscal 2009.
Turn adjusted EBITDA positive (earnings before interest, taxes, depreciation, amortization, and stock-based compensation expense) in the second half of 2009, reflecting benefits from continued operational improvements in the slot participation business and the ongoing reduction in operating expenses.

Mr. Chung concluded, "With a strengthened balance sheet and suitable level of electronic gaming machines in inventory, Elixir Gaming has the flexibility and infrastructure to identify and quickly capitalize on new opportunities in existing and new targeted markets. We are encouraged by the net win improvements in the Philippines resulting from our ongoing efforts to optimize the performance of our installed base and remain focused in our efforts to drive further win per day improvements at all our facilities. In addition, Elixir Gaming’s initiatives to significantly reduce our annualized costs should provide additional leverage in our business model, which combined with continued increases in participation revenue, should lead to the Company turning adjusted EBITDA positive in the second half of 2009."

Q4 and Full Year 2008 Financial Review

Revenues from gaming machines on participation were approximately $1.0 million in the fourth quarter of 2008 compared to revenues of $1.1 million in third quarter of 2008 and $0.3 million in the fourth quarter of 2007. Elixir Gaming’s fourth quarter 2008 total revenues were $2.1 million compared to $3.6 million in the third quarter of 2008 and $2.6 million for the fourth quarter of 2007. The quarterly sequential decline reflects softness in our recently divested legacy casino table games business. Total revenues for fiscal 2008 increased to $12.3 million from $12.2 million in fiscal 2007 as incremental growth in revenues from gaming machines on participation and growth in non gaming operations offset declines in the legacy table game business.

Elixir Gaming reported a fourth quarter 2008 net loss of $4.8 million, or $0.04 per share, on a weighted average share count of 114.9 million shares compared to a net loss for the fourth quarter of 2007 of $12.7 million, or $0.14 per share, on a weighted average share count of 92.6 million shares. The fourth quarter 2008 net loss includes non-cash, non-operating charges of $1.2 million, or $0.01 per share, reflecting one-time restructuring charges as well as impairments to other intangibles related to the China manufacturing plant. The fourth quarter 2007 net loss reflects the impact of a non-cash, non-operating charge of $8.7 million as a result of impairments to goodwill and other intangibles related to our Dolphin Products subsidiary and a loss on the extinguishment of debt as a result of the repayment of $11.0 million in debt during the period. Cash SG&A expense for the fourth quarter of 2008 was $3.3 million, a decrease of $1.0 million from the year-ago period and $0.5 million from the third quarter period. The Company benefited from a $3.2 million adjustment to non cash stock compensation expense in the quarter related to the adjustment for actual forfeitures due to significant employee turnover in late 2008 and the revaluation of options granted to non employees based on their fair market value.

For the twelve months ended December 31, 2008, Elixir Gaming reported a net loss of $27.0 million, or $0.23 per share, on a weighted average share count of 114.9 million. The fiscal 2008 net loss includes non-cash, non-operating charges of $2.8 million, or $0.02 per share, reflecting one-time restructuring charges and impairments to other intangibles related to our China table game products. For the twelve months ended December 31, 2007, Elixir Gaming reported a net loss of $234.6 million, or $4.55 per share, on a weighted average share count of 51.6 million. The fiscal 2007 net loss includes non-cash, non-operating charges of $214.0 million, or $4.15 per share, of which $170.9 million reflects the value of warrants and shares issued to Elixir Group related to the Company’s change in business strategy effected in the second half of 2007. The net loss, excluding the effect of the non-cash, non-operating charges noted above, increased in fiscal 2008 from fiscal 2007 due to an increase in the costs of goods sold primarily related to non-cash expenses associated with the depreciation of gaming machines and higher SG&A expense.

Elixir Gaming is hosting a conference call and simultaneous webcast at 8:30 a.m. ET today, March 19, both of which are open to the general public. The conference call number is 212/676-4919 or 415/247-8585. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.elixirgaming.com; please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for thirty days on the Internet at www.elixirgaming.com.

About Elixir Gaming Technologies, Inc.

Elixir Gaming Technologies, Inc. (AMEX:EGT) is a provider of gaming technology solutions. The Company secures long-term contracts to provide comprehensive turn-key solutions to 3, 4, and 5 star hotels and other well-located venues in Asia that seek to offer casino gaming products. The Company retains ownership of the gaming machines and systems and receives recurring daily fees based on an agreed upon percentage of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with a focus on the Philippines and Cambodia markets. For more information please visit www.elixirgaming.com.

Forward Looking Statements

This press release contains forward-looking statements concerning Elixir Gaming, Elixir Group and Elixir International within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include statements regarding expectations for the business of Elixir Gaming, its working capital requirements and future revenue and profitability. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to Elixir Gaming’s inability to place gaming machines at significant levels, whether the gaming machines placed generate the expected amount of net-win, the ability of Elixir Gaming to acquire additional capital as and when needed, the ability of Elixir Gaming to collect revenue and protect its assets and those other risks set forth in Elixir Gaming’s annual report on Form 10-K for the year ended December 31, 2007 filed with the SEC on March 31, 2008 and our Form 10-Q for the three months ended September 30, 2008 filed on November 14, 2008. Elixir Gaming cautions readers not to place undue reliance on any forward-looking statements. Elixir Gaming does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

CONTACTS

Elixir Gaming:
Traci Mangini
SVP, Corporate Finance
312/ 867-0848

- financial tables follow -

Elixir Gaming Technologies
Consolidated Statements of Operations
(Unaudited)

		Three Months Ended December 31,				Twelve Months Ended December 31,
		2008		2007		2008		2007
Revenues:
Gaming machine participation	$	1,036,423	$	258,240)	$	3,433,096)	$	389,596)
Table game products		137,368		553,096)		1,805,174)		5,206,076)
Non-gaming products		925,204		1,814,721)		7,071,611)		6,644,891)
		2,098,995		2,626,057)		12,309,881)		12,240,563)

Operating costs and expenses:
Cost of gaming machine participation		2,772,384		521,080)		9,071,439)		677,725)
Cost of table game products		700,849		1,552,326)		2,132,709)		5,387,482)
Cost of non-gaming products		896,560		1,735,226)		6,159,292)		6,662,205)
Selling, general and administrative		657,032		4,696,165)		17,875,704)		18,139,530)
Impairment of goodwill, intangibles, and other assets		749,831		10,849,887)		2,118,660)		40,458,972)
Participation acquisition fees		―		(4,213,000)		―		170,857,000
Research and development		191,370		235,255)		968,922)		974,870)
Depreciation and amortization		304,317		276,577)		1,084,239)		1,002,607)
Restructuring charges		497,849		(259,782)		666,125)		1,362,750)
Loss on extinguishment of debt		―		1,366,083		―		1,366,083
		6,770,192		16,759,817)		40,077,090)		246,889,224
Loss from operations		(4,671,197)		(14,133,760)		(27,767,209)		(234,648,661)

Other income (expense):
Interest expense and finance fees		(172,152)		(246,328)		(737,028)		(2,066,361)
Interest income		76,946)		220,558)		706,552)		323,312)
Acquisition costs		―		―		―		(195,431)
Gain/(loss) on dispositions		89,324		(195,430)		89,324		―
Foreign currency gain/(loss)		(385,873)		723,434)		252,568)		714,094)
Other		45,423		505,599		291,275)		521,342)
		(346,332)		1,007,832		602,691)		(703,044)
Income tax benefit		231,820		405,552		209,322		753,125)
Net loss	$	(4,785,709)	$	(12,720,376)	$	(26,955,196)	$	(234,598,580)

Basic and diluted loss per share	$	(0.04)	$	(0.14)	$	(0.23)	$	(4.55)

Weighted average common shares outstanding		114,956,671		92,552,854)		114,948,384		51,574,786)

Elixir Gaming Technologies
Consolidated Balance Sheets

		December 31, 2008		December 31, 2007
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents	$	14,504,433	$	68,286,820)
Current portion of accounts receivable, trade, net of allowance for uncollectibles of $923,603 and $176,666		1,336,261		1,689,909)
Due from related party		531,109		―
Other receivables		78,082		298,940)
Inventories		1,096,046		1,686,670)
Prepaid expenses and other current assets		1,299,487		855,738)
		18,845,418		72,818,077)

Accounts receivable, trade, net of current portion		―		60,421)
Gaming machines and systems, net of accumulated depreciation of $7,081,817 and $569,926		48,351,545		39,193,962)
Property and equipment, net of accumulated depreciation of $2,917,147 and $3,039,933		3,724,467		3,934,532)
Intangible assets, net of accumulated amortization of $2,356,269 and $1,689,096		4,123,403		5,486,321)
Goodwill		84,210		84,210)
Prepaid commissions		―		1,398,800)
Deposits and other assets		1,284,679		617,894)
Total assets	$	76,413,722	$	123,594,217)

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	806,538	$	1,798,459)
Amount due to related party		27,672		29,601,448)
Note payable to related party, current portion		5,884,049		―)
Accrued expenses		2,712,758		5,248,458)
Deferred revenue, current portion		1,437,890		―)
Short-term debt		29,372		31,893)
Capital lease obligations, current portion		269,371		480,663)
Customer deposits		87,679		197,019)
		11,255,329		37,357,940)

Capital lease obligations, net of current portion		468,424		916,444)
Note payable to related party, net of current portion		6,185,088		―)
Other liabilities		525,986		99,966)
Deferred tax liability		495,560		931,934)
		18,930,387		39,306,284)
Stockholders' equity:
Common stock, $0.001 par value, 300,000,000 shares authorized; 114,956,671 and 114,914,934 shares issued and outstanding		114,958		114,916)
Additional paid-in-capital		413,987,828		411,323,072)
Accumulated other comprehensive income		(2,107,842)		406,358)
Accumulated deficit		(354,511,609)		(327,556,413)
		57,483,335		84,287,933)
Total liabilities and stockholder equity	$	76,413,722	$	123,594,217)

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Contact Us

United States
40 E. Chicago Avenue, #186
Chicago, IL 60611-2026
USA
Tel: (312) 867-0848
E-mail:
tracimangini@EGT-Group.com

Hong Kong
Unit 3705, 37/F The Centrium,
60 Wyndham Street,
Central, Hong Kong
Tel: (852) 3151-8000

Philippines
3rd Floor, 32nd and 5th Bldg.,
32nd Street corner 5th Avenue
Bonifacio Global City,
Taguig, Metro Manila 1634
Philippines
Tel: (632) 856-6856

Cambodia
7E, Street Mao Tse Toung Blvd,
Samgkat Beoung Keng Kong,
Khan Chamkamorn,
Phnom Penh, Cambodia
Tel: (855) 23-727 483

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